Idle thoughts – Unstructured musings from Joel Dunn…

Book Review, “The Age of Turbulence”, by Alan Greenspan

One of the most enjoyable books I’ve read in a while is “The Age of Turbulence.” I’ll confess up front that I’ve always had a great deal of admiration for the seeming stability with which Greenspan ran the Federal Reserve Board, and while I consider myself a political liberal, my undergraduate degree is in business, and I think I absorbed too much capitalism to be an economic liberal. I’d heard that this book was a very readable peek into global finance & economics, and I certainly concur.

Greenspan starts the book with two chapters on his childhood and education, and from there goes into the beginnings of his career as an economist. I think there’s something I related to in his account of his academic years…he left his doctoral studies for his career and life. While I started graduate school after I began my working career and I did finish a Master’s, I left the doctoral program with the coursework behind me before starting a dissertation. The fact that Greenspan finished his PhD in later years gives me hope.

After discussing his schooling and his years at Townsend-Greenspan, he turns to his introduction to politics on the campaign of Richard Nixon, and then his work with and admiration for Gerald Ford. Greenspan went back to private life during the Carter administration, but was tapped for his Federal Reserve post by Reagan.

The book was informative on the workings of the Fed, but the parts I found most fascinating, personally, were the descriptions of the workings of the government and politics and their intersection with the economy. Greenspan was very comfortable with Bill Clinton, and found him not only engaged in and caring about economics, but understanding this and making good decisions. My take-away was that while Clinton indeed presided over the “dot com” boom, that this was not entirely good fortune and serendipity…the economic policies and decisions by the Clinton White House has much to do with this boom in economic history.

We all know the phrase “irrational exuberance” that was uttered by Greenspan in 1996 as the Dow charged ahead. I found it quite interesting to read the context of this and the way those words have become part of the popular culture.

The beginnings of the downturn in 2000 and the change in the presidency was a pivotal time. I found that Greenspan actually didn’t think much of Bush 43, particularly as he insisted on doing what he said vis-a-vis taxes and the economy, rather than adapting to the strategy warranted by the change in economic conditions, and that Bush 43 also did not try to rein in spending and maintain the balanced budget left him by Clinton.

His assessments of the other significant and growing world economies are quite readable and thought-provoking. America cannot be an isolated island. While de Tocqueville rightly attributed much of the early growth and stability of this country to its fortuitous geography, we no longer have that luxury. This is a global world and global economy. Decisions have to be made that are consistent with that framework. Globalization, as Greenspan says, is a positive factor “…all credible evidence indicates that the benefits of globalization far exceed its costs, even beyond the realm of economics.”

We must think about the future, Greenspan says. We have to engage the world, and we have to have an educational system that addresses the need to supply skilled workers to keep competitive and to help address income inequality.